in a city of the future
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(@keunwoo's blog)

Sunday, May 21, 2006

Notes on network neutrality

So, "network neutrality" has been getting lots of press lately. Briefly, network neutrality is the principle that Internet carriers should provide "dumb pipes" that carry all Internet traffic equally, rather than discriminating based on the type, content, or destination of the traffic that flows across their networks. A wide array of interests --- including MoveOn, Google, and a number of other groups and companies across the political spectrum --- have been lining up behind initiatives to codify this principle in law for US Internet carriers. The principal opposition to the coalition comes, unsurprisingly, from two quarters: the telecommunications companies, and libertarians.

My reaction to this is twofold. My first and predominant reaction is: I am troubled by the idea of getting the FCC involved in regulating how Internet service providers architect their networks. The Internet actually works pretty well these days, so it seems dangerous to get Congress monkeying around with its guts. And the question of what constitutes a "neutral" network is pretty subtle, as the term has no widely agreed-upon technical definition.

In the absence of a technical consensus, the output of the legislative process is likely to be either a mishmash of mistargeted micro-regulations, or a vague and overly broad mandate for the FCC. Who knows what will come out of that process, but in my opinion the most likely outcome is simple regulatory friction that slowly, invisibly eats away at network innovation. Network innovation won't go away, but certain kinds of innovation will become more difficult because of legal complications, and the Internet will suffer. Therefore, I suspect that any legislation written today will hurt the Internet more than it helps. It is with some surprise that I find myself agreeing with the telecom giants and the Cato Institute, and disagreeing with MoveOn, Google, etc. If network neutrality regulation passes now, I think progressive activists and technology companies alike will live to rue the day they begged for it.

My second reaction is that this whole debate strikes me as a kind of bizarre ritual theater in which people are making noises and gesticulating wildly, but nobody talks about the real issue.

Political outfits --- ranging from MoveOn to the Christian Coalition --- are worried that network providers will begin to discriminate based on the political content of messages. This is pretty unlikely. It's not easy for an algorithm to look at a bag of bytes and classify its political content; and network providers probably can't pay for the computational power required to apply such an algorithm to the many terabytes of data that flow across their networks daily.

And even if they could, why would they? There's no percentage there. In fact, I can think of two very strong reasons for them not to start filtering based on political content. First, there would be an enormous consumer backlash. Second, there would be enormous political fallout. The latter would include not only backlash against abuse of quasi-monopoly power, but possibly the imposition of responsibility for the content that flows across the pipes. Once you begin filtering based on political content, lawmakers may poke their heads in and wonder why you aren't filtering out all that kiddie porn and gambling and such too --- and if something gets through your filters, why can't we hold you liable? The network providers don't want to open that can of worms.

So, political censorship isn't the real issue here. Nor, paceMoby et al., is it interconnection with small media providers versus large ones. Verizon's not terribly likely to block access to your music blog. They might, someday, contract with certain service providers for improved performance. For example, they might strike a deal with iTunes to store songs in a local proxy cache, so that Verizon customers would observe slightly improved performance with iTunes, but not your music blog. That doesn't strike me as either disastrous or a betrayal of the Internet's principles. Networking researchers have been proposing schemes like this for years. In fact, Akamai's basically a third-party version of this scheme: people pay them to store content in caches close to where it's demanded, so Akamai-cached websites perform better than non-Akamai websites. Akamai's been operating since 1999, and so far the Internet hasn't been torn asunder.

So what's the real issue?

As Ars Technica noted back in January, Verizon CEO Ivan Seidenberg was making noise about Google's (over-)"use" of Verizon's bandwidth. And last November, SBC CEO Edward Whitacre complained about Google and Microsoft using "my pipes" (meaning, of course, SBC's pipes; Whitacre suffers from your usual case of CEO megalomania):

"So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?"

In a way, you have to give Seidenberg and Whitacre credit. In making these noises, they display a level of stupidity and chutzpah that rivals the dudes from Jackass.

First, the chutzpah: Google does pay its ISP for its Internet connectivity, just as Verizon customers pay Verizon for their Internet connectivity. Yet Seidenberg claims to believe that Google should pay Verizon for the Internet connectivity that Verizon's customers have already paid for. It's as if Ford were to ask Wal-Mart to pay fees to Ford, because Wal-Mart's customers were driving to Wal-Mart in Fords.

Second, the stupidity: five and a half months later, Verizon's lobbyists are working overtime to prevent network neutrality legislation from passing. And guess who's paying for the lobbyists on the other side? In many ways, Seidenberg, Whitacre, and their telecom industry cronies brought this circus on themselves through overreaching arrogance and greed.

So, here's the real story. The telecom giants currently sell you Internet access, which is okay, but dull. Dumb pipes are cheap. But hey --- what if they could sell you lots of bundled services? That really gets the dollar signs flashing in their eyes. These are the companies that want to sell ring tone subscriptions for your cell phone, and bundled cable packages with more channels than you'll ever watch. Their dream is to add a dozen extra bullshit services to your Internet service bill, so that you're paying them eighty dollars per month instead of fifty.

The big problem with that plan is that once you have dumb pipes and smart endpoints --- in other words, the Internet --- the endpoints can build essentially any service on top of the network. Of course, this is fantastic for Internet users. Once you pay for Internet access, you automatically get to use every Internet application that's ever been invented: email, the web, instant messaging, peer-to-peer, and (increasingly) the two V's, voice and video. These last two really drive the telecom giants nuts, because they used to sell you voice and video: they're phone and cable companies.

Therefore, the most likely form of telecommunications discrimination in the foreseeable future is discrimination by application, not by content. Verizon wants to give preference to its voice services, and Comcast wants to give preference to its video services. They're deeply freaked out by Skype, Google Video, and the like. If they can convince customers that competing services are slow and crappy compared to their own offerings, they think they'll have a better chance of getting you to pay for their bullshit services. Failing that, they'd like to convince Google and other Internet companies to pay fees for non-degraded service. Think of it as protection money: "Nice customer base you got there. Sure would be a shame if your packets were dropped 20% more often than your competitor's..."

If network providers got serious about this, the results would be pretty bad. Network providers should not be picking winners and losers in the Internet applications game. Applications should succeed or fail on their own merits. Now, I think network discrimination schemes would fail in the long run, but that's just a hunch and it's really an open empirical question. Meanwhile, in the short run, discrimination schemes could cause major distortions in the Internet applications market; and when you consider the possible network effects in domains like Internet telephony, it's possible that these distortions could cause lingering damage, locking in inferior applications for years to come.

So I'm really glad that people are paying attention to network neutrality. But I'm also alarmed that so few of those people seem to understand what's really going on here, and I'm skeptical that now is the time to make laws about it. So far, the Internet's still neutral. My bottom-line recommendation would be to watch and wait.

(And also to increase competition in local ISP markets, which would give customers a choice when confronted with discriminatory network policies. Note that this wouldn't be a panacea, because in practice most localities would still be served by a few providers, each of which might have an incentive to discriminate, albeit in differing ways. Oligopolies don't necessarily lead to efficient markets.)

22 comments:

What an in-depth and well put together posting. Like you, I have serious concerns about NN. It seems to me the Internet is working just fine, with new innovation popping up almost on a daily basis. What scares me is how we have a mumbo-jumbo group of folks - CCA, Moby, REM to name a few - who would never sit next to each on a plane all rallying around NN. Ok, that alone is enough for me to wash my hands free of NN!!

If net neutrality legislation passes, here is my prediction. Three years from now, when we're wondering what happened to Internet innovation, and wondering why companies are going out of business, we'll look back at these silly little rules, once championed by political extremists. Some well-meaning legislator will take a look at the strict regulations, and perhaps loosening them. But, by then, government will be so used to controlling the Internet that they will accuse the legislator of hating the Internet, and working for big business. Isn't that how it always goes when the government mettles where it doesn't belong?

Oh, come on. Internet innovation's not going to grind to a halt no matter what Congress does. There will probably be a cost to network neutrality regulation, so on the margin certain kinds of network innovation (and maybe infrastructure buildout) will happen more slowly or not at all. But neither side's doomsday rhetoric is really justified here.

And dismissing net neutrality advocates as "political extremists" is pretty inaccurate. The coalition's successfully drawn people from all over the political spectrum. Lawrence Lessig and Microsoft hardly count as extremists.

I can understand the concerns of the pro-NN groups. I mean, the potential DOES exist for the telecoms to block sites or intentionally slow certain services. But, really, what are the chances that an ISP will block out a site--ANY site. Sites and services like Google, Skype, etc. are too big to shut down without an uproar from users... The small unknown startups aren't big enough to justify the effort.

Personally, I think we should wait to subject the Internet to regulation until there is documented evidence, cases of abuse, actual instances of site blocking, etc.

I agree the government should just cool their heels on this matter until a need for regulation arises (like watcher points out, with documented cases of abuses or site blocking or whatever). Ultimately, the consumer has the deciding role in all of this, as it's their money that'll be paid toward the various services and sites...and since a free-market economy is still the order of the day, I think the issues should be settled there, not on Capitol Hill where b-list celebrities are whispering in Congressmen's ears like they know what's best for America.

How free is the market in telecom services? How much competition do you have in your local ISP market? I know that in mine, there are a number of DSL services but they all contract with Qwest for the underlying lines. As for cable, there's Comcast and that's it.

And even if there's competition today, how much advantage did incumbents wring from their existing, previously monopoly-protected infrastructure before the market for Internet services opened up?

Open up your introductory econ textbook and look up the conditions for robust market competition. The telecom market doesn't look much like the market for wheat or butter.

Without competition, where would those whining companies like Google be? Why are they only NOW complaining? And now i hear Moby and REM are taking sides on the pro-NN battle. What kind of experts are these cats?

Are you suggesting that Google's success to date implies the existence of robust competition in local ISP markets? I don't really have time today to explain all the ways that's a stupid claim, but I think most readers can figure out for themselves. You might want to take a moment to pause and think before you hit the submit button next time.

Cog- I think net chick is implying a different kind of competition, but it is a simple fact that most Americans have a choice of at least 2 high-speed providers. That sort of competition is constantly growning and shouldn't be ignored on this issue.

I agree with this post that the best course of is action is to wait and see what happens after thetelcos devote bandwidth to these new services. I agree there are chances that problems could arise, but we don't no for sure. Setting up government guidlines for a problem that doesn't exist would not help in adressing a problem once it arises. Government involvement would only compound the problem.

I agree, Microsoft et al aren't extremists at all...they're businesses, looking out for their own best interests and trying to make as much money as possible. That's why they're on side and the telcos are on the other. So let them fight over it. Why WOULDN'T we wait for a problem to develop before we legislate said problem?

(Sigh.) It's so frustrating when people agree with you, but their reasoning is so bad that they might as well be disagreeing. I agree that it's best to wait, as I pointed out in my original post. However, Cousy's comment remains monumentally dumb:

1. anonymous characterized the net neutrality coalition as "political extremists". I gave two examples of non-extremists in the coalition: Lawrence Lessig and Microsoft. So Cousy responds by dismissing the net neutrality coalition as "businesses". Can anybody point out why this is an equally bad characterization of the net neutrality coalition?

2. If you have a principled belief about net neutrality legislation, then you sure as fuck don't want to just let them fight over it, because then the wrong side might win. This is true regardless of which side you're on. The fact that a business favors some policy doesn't invalidate the principled arguments (if any) for that policy. I'm amazed that I even have to explain this to libertarians.

The $ 100 laptop project seems to route around this net neutrality problem by redefining the internet. When all computers are delivered with wifi and mesh-networking software then they could connect to the local internet cloud, in effect reclaim the first mile of the internet for the user.

Some small volunteer projects would then be enough to hook up these local clouds to one another. Maybe that even Google would want to donate to this effort? This would create a parallel internet out of the control of anyone and in to the hands of everyone.

Will the government allow this? Notice that such a mesh-network can not be wiretapped and connection data ("phone records") can not be collected...

Net neutrality seems to be more a power struggle than a fight to protect consumer rights and services. I don't want the Internet in the hands of a few who can determine what goes on and through the Internet, especially big government!

Cog, thanks for the great article! Believe it or not, i was asked to participate on a panel about net neutrality recently. I was expected to spread the usual FUD, but instead I found I worried more about regulations than the alleged threat to individuals (btw, great weasel word "net neutrality." What the hell does that mean?)

I was hearing the net neutrality meme be uttered at a geek conference I attended recently, and my instinctive response was to say, wait, why should the state be intervening here (haven't we seen the follies of that?).

First, it's unlikely that any scenarios will make bandwidth for consumers any more expensive than it is today. Frankly, the amount of bandwith we have today is more than enough for me as a consumer/content creator or small media publisher. It will probably be that way for at least the next 10 years. I can't imagine ever needing more. The real danger area is in HD video streaming and online games, but I seriously doubt that there will ever be a single pipe to distribute or download these things anyway.

So what if SBC decides to implement a tiered system of bandwidth! Consumers just stop renewing their contracts if they hate it enough. That's much better than making courts and legislators do a lot of hairsplitting about what legislative intent was/should be.

The thing I find strange is that if anything, this action, by passing on some costs to distributors, could ultimately benefit consumers by lowering subscription costs. Tiered pricing could increase flexibility. I really am not sure. But that should be for private industry to decide. Even if legislators were relatively well-informed and up-to-date, the pace of technology change tends to outstrip that of legislative oversight; this legislation will probably be obsolete on the day it is passed.

A key question should be: will such a law make it easier or harder to start a new business or offer a new service?

As I wrote before, I worry less about net neutrality than EULAs that ISPs and MSM can impose on customers. These things threaten our liberties!

What an in depth post. Why would anyone in their right mind (that actually uses the internet and knows what they're talking about) want to put internet regulations in the hands of congress? Not only to cause further controversy in the future, (one regulation leading to another) but also to slow down innovention. We don't want that.

rjnagle: First of all, if you can't imagine why you'd need more bandwidth, then you lack imagination. Consumption of bandwidth has historically increased by orders of magnitude as new applications come online.

Even today, when I download music that I've bought from eMusic, it actually takes me a nontrivial amount of time to grab a full album on my home broadband connection. And that's not even at the "ideal" bandwidth consumption for this application: with storage prices as low as they are, why do people distribute music as relatively low-quality MP3s rather than FLACs, or at least higher bitrate OGGs/MP3s?

Second, you're right that it's unlikely that future scenarios will make bandwidth more expensive. However, that's a trivial statement. By analogy, if Congress implemented economic policies that resulted in zero percent (real, per capita) economic growth, then Congress could still take credit for not shrinking the economy, but it would still represent a dramatic failure. Bandwidth is getting cheaper, just as the economy's growing, and the goal is to maximize the benefit that users realize from this growth. Network discrimination based on application would cause network users to benefit less from bandwidth increases than they otherwise could have.

Third, I don't know what you mean about video and online games. These are merely different classes of application that could be carried over the Internet, given adequate bandwidth.

Fourth, local broadband markets aren't competitive enough that consumers can be assured of getting an efficient deal. If tiered access becomes a reality at any level of the network --- whether at the backbone or the last mile --- it's not always clear that consumers can opt out via the market. To take the Seattle area as an example, if Qwest and Comcast both decided to discriminate at the link layer, local broadband users would have no choice left.

All that said, I still favor no net neutrality legislation at the present time. But you, and most of my commenters, seem to be opposing it because of knee-jerk anti-government sentiment, not a clear-eyed view of reality.

COG- We all may have different reasons for opposing net neutrality legislation right now, but you must admit that the problems are complicated enough that legislation is the worst possible solution right now.

I agree that waiting is the best thing to do with th internet right now. The Net Neutrality legislation is being written to preven problems that are currently non-existent. I also think that ISPs blocking content just seems like too disastrous a business move to ever come to fruition. If any big problems do result in the internet, I am all for finding a way to stop the. However, right now nothing needs to be fixed.

"knee-jerk anti-government sentiment" ? I really don't know what to make of that characterization. Why is having a presumption against regulation (yes, one that probably has some empirical basis) indicative of some failure of rationality? (For the record, I taught at business colleges for three years in interventionist economies in Eastern Europe, an experience that may have jaded my perspective somewhat).

I worry less about tiered service than I do about blocking p2p traffic. Then again, I see no need to enact legislation to keep certain ports open.